Eden Energy to spin off UK gas assets into ASX listing

Eden Energy (ASX: EDE) is seeking to spin off its wholly owned UK coal seam methane/shale gas subsidiary, Eden Energy (UK) Ltd, into a new proposed ASX listing to be called Adamo Energy Ltd.

The proposed new float will involve a capital raising of at least A$10 million with Eden Energy shareholders to be offered a priority entitlement via a prospectus.

Eden's vast UK shale gas and coal bed methane portfolios are potentially company making as the Welsh shale gas resource, in which Eden holds a 50% interest, is of world class dimensions.

Independently reported Shale Gas Unrisked Prospective Mean Resources GIIP for part of the licence area stand at 49.8 trillion cubic feet of gas (TCF).

The company plans to undertake this spinout as soon as market conditions are deemed are suitable and it will be subject to all necessary approvals being obtained.

The company has a 50% interest in 17 licences located in South Wales, Bristol and Kent. Eden holds a 100% stake in three licences. The landholding has a total area of about 2,100 square kilometres (510,000 acres).

The UK landholding will result from Eden UK agreeing to buy back the 45% interest in the coal seam methane rights in two licences that it sold in 2008, acquiring a 100% interest in three additional licences in south Wales, and completing its remaining farm-in obligations in the original joint ventures.

Eden's prospective Welsh shale gas resources were outlined by independent experts RPS Group Plc and results indicate just how significant it could be for the company.

The large prospective gas resource includes a shale gas unrisked prospective resource, with the GIIP mean equalling 49.8 tcf (Gross): Eden 24.9 tcf (Net).

The unrisked prospective recoverable resource mean equals 18.3 tcf (Gross): Eden 9.1 tcf (net).

The CBM Resource includes a contingent resource P50 of 1.0 tcf (Gross); 0.5 tcf (net) and a prospective resource P50 of 3.1 tcf (Gross); Eden 1.6tcf (net).

The vast size of the resource is put into perspective when one considers in 2009, the UK used a total of about 3.6 tcf of gas, and the Gorgon gas field is only 40tcf and plans to produce 15 million tonnes of LNG for 40-60 years.

The Gorgon offshore gas field off Western Australia that is being developed for a reported cost of more than $40billion by a consortium including Chevron, Shell and Mobil is reported to contain 40tcf of gas and is planned to produce 15 million tonnes of LNG per year for between 40-60 years.

The company has a management team in place in the UK which has a very strong prospective gas market. Total demand for natural gas in 2009 was equivalent to approximately 3.6 TCF.

The UK is now a net importer of natural gas and the industrial price of natural gas in 2009 was 58% higher in the UK than in US.

With the recent production of the first carbon nanotubes at the Nano-carbon/Hydrogen Pyrolysis Project in Denver, Eden Energy has achieved a significant milestone in its quest to become a major global player in the development of hydrogen derived clean energy.

However, for a company with a market capitalisation of around $18 million, this prospective enormous gas resource is likely to be a significant value add for Eden's share price in 6-12 months.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19506/eden-energy-to-spin-off-uk-gas-assets-into-asx-listing-19506.html